The emphasis, perhaps ought to be on ‘in the main’.
First, a few negatives/moans.
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Interchange: it seems an age ago but it was actually only July 2013 when the European Commission published its proposals for regulation of interchange fees: 0.2% (of the value of the transaction) for consumer debit card transactions and 0.3% for consumer credit card transactions.
This proposal was the result of years of competition law reviews by national regulators and the Commission.
For me at least, political interference and regulation of this sort is almost inevitably going to result in unfortunate unintended consequences.
Think back to the US experience of Dodd-Frank. This placed a cap on debit card payments of $0.21. The result: banks increased their fees to compensate and consumers paid more.
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By GlobalDataCapital One was one of the first to cut back card rewards, ending the 0.5% cashback perk for customers, telling cardholders that the change was as a result of the interchange regulations.
Avios (Air Miles as was), Sainsburys and Tesco also watered down their cardholder benefits.
Others, inevitably, will follow. While the benefits for retailers are obvious, evidence of savings being passed on to consumers in the form of lower prices – as promised by the politicians – is awaited.
It is to be hoped that the interfering political classes are not being serious in taking aim at the prepaid cards sector as a result of the appalling terrorist attacks in Paris.
David Parker, a longtime ally of and contributor to CI, was quick off the mark in ridiculing the idea of the French authorities imposing stricter controls on prepaid as a result of the terrorists apparently having used prepaid cards.
The notion is about as logical as that of 19th century politicians opposing the growth of the railways, just because bank robbers had made their getaway via train.
As for the years highlights: one has to include contactless growth, though this remains a work in progress with so much scope for further spectacular growth. Outside London and other UK major cities, the majority of UK merchants still not accept contactless payments.
The delay on the part of certain major retailers, and I mean Sainsburys, in rolling out contactless terminals has been lamentable.
ven at Tesco, the country’s largest retailer, contactless acceptance around the country is far from universal.
As CI goes to press, Barclays has estimated that as much as two-thirds of UK merchants still do not accept contactless payment, despite the technology having been available for about seven years.
Other highlights: it has been a gratifyingly positive year for growth in payment card spending, up 8.2% year-on-year in September in the UK, the latest month for which results are to hand.
Annual growth in debit card spending continued to exceed that in credit card spending with growth rates of 8.7% and 6.9% respectively.
EMV liability shift in the US: this has to be included in the positive column. Now, tackling fraud has to be be prioritised. It beggars belief that, to date, US retailers and consumers have struggled to adapt to the use of chip and PIN.
There is no excuse for fraud rates in the US to remain stubbornly high. For banks, issuers and all involved in the cards sector: it really ought to be obligatory for them to be locked into a room with the likes of FICO for as long as it takes to sort out practical strategies to get their act together.
Apple Pay: a limited positive, at least thus far. 2015 was not exactly the year of Apple Pay, at least as measured by usage rates. The stats for 2016 will make for fascinating reading.
To all subscribers, freelance contributors, commercial partners, the vendor community, analysts, consultants, press offices and PRs: a very hearty Merry Christmas and all best wishes for 2016.
